Employee Stock Ownership Plan
A term to know.
An employee stock ownership plan (ESOP) is a defined contribution plan such as a stock bonus plan, or a combination of a stock bonus, and a money purchase plan. An ESOP must be designed to invest primarily in qualifying employer securities as defined by Section 4975(e)(8) and meet certain requirements of the Code and regulations. IRS and the Department of Labor share jurisdiction over various aspects of ESOPs.